Energy fund support key to security

In his State of the Union address earlier this month, President Barack Obama discussed the importance of strengthening U.S. energy security. Toward this end, he proposed the creation of a federal Energy Security Trust to fund critical near- and medium-term technologies for reducing dependence on oil in the transportation sector. The president proposed that the fund be seeded by royalty revenues from oil and gas production on federal lands.

The president’s remarks staked out a position that allows for compromise on an issue that is important to Republicans and Democrats alike and could form the basis of bipartisan action to achieve lasting progress on energy security in 2013. Sen. Lisa Murkowski (R-Alaska) has endorsed a similar proposal. We have long advocated establishing an energy security trust because it acknowledges several basic facts.

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First, it is in the interest of the United States to produce more of its oil domestically. It is by now a well-worn statement that important shifts in U.S. production and consumption of liquid fuels are already under way. Domestic crude production is increasing at a faster rate than at any time since the 1960s, and new fuel-economy standards are improving the efficiency of our cars and trucks. This combination is driving U.S. petroleum imports to levels last seen in the 1990s. And yet, because of high global oil prices, the country still spent nearly $300 billion on oil imports in 2012, accounting for more than half of our trade deficit. Increasing oil production on federal lands and waters — which are estimated to hold nearly 120 billion barrels of technically recoverable resources — will help keep more U.S. capital at home.

Second, the U.S. cannot achieve oil security through increased production alone. Instead, we must find alternatives to oil, particularly in transportation, where it provides more than 93 percent of our energy needs. U.S. oil dependence exposes consumers and the economy at large to the volatility of the global oil market, which means that higher domestic oil production does not necessarily mean lower prices at the pump. This fact is surely not lost on American consumers, who spent a record $3,000 on gasoline in 2012 (up from $1,235 a decade ago), despite surging levels of domestic oil production. Increases in U.S. supply are unlikely to reduce global oil prices or the kind of volatility that comes from unexpected events like 2011’s Arab Spring and the Libyan civil war.